Scott Bessent, former U.S. Treasury Secretary under the Trump administration, has voiced strong disapproval of the recently finalized trade agreement between the European Union and India. Bessent criticized the EU for prioritizing commercial interests over its support for Ukraine, stating he was "very disappointed" by the deal.
The EU and India officially finalized the long-awaited trade deal on Tuesday, after roughly two decades of negotiations. European Commission President Ursula von der Leyen hailed the pact as the "mother of all deals". The agreement aims to boost two-way trade and reduce the bloc's reliance on the U.S. amid growing global trade tensions. It is projected to double EU exports to India by 2032 through the elimination or reduction of tariffs on 96.6% of traded goods. The EU anticipates savings of 4 billion euros in duties for European companies.
Bessent, speaking to CNBC on Wednesday, argued that the agreement demonstrates the EU's willingness to put trade ahead of its stated commitment to the Ukrainian people. He highlighted that while the U.S. imposed tariffs on India for buying Russian oil, the EU, also on the front lines of the Ukraine-Russia war, was unwilling to do the same, ultimately choosing to pursue the trade deal. He further claimed that the Europeans were indirectly funding the conflict by purchasing refined products made from Russian oil that India bought. "So every time you hear a European talk about the importance of the Ukrainian people, remember that they put trade ahead of the Ukrainian people," Bessent stated.
According to the EU, the agreement will eliminate tariffs on over 90% of tariff lines, and 91% in terms of value. India will eliminate tariffs on 86% of tariff lines, and 93% in terms of value. Moreover, both sides will partially liberalise a significant additional number of lines, thereby bringing the overall coverage of trade liberalisation to 96.6% for India and 99.3% for the EU. Key sectors expected to benefit in the EU include agri-food, chemicals, pharmaceuticals, machinery, medical devices, avionics, and automotive industries. For India, the agreement is expected to boost fisheries, chemicals, textiles, footwear, and pharmaceuticals.
Meanwhile, U.S. Trade Representative Jamieson Greer suggested that India emerged as the stronger party in the deal, gaining greater market access into Europe. He also pointed out the potential for India to capitalize on its low-cost labor.
Despite Bessent's criticism, the EU-India trade deal is expected to have a significant impact on global trade. The agreement could lead to increased Indian garment and pharmaceutical exports, potentially lowering costs for EU importers. Reduced car tariffs in India may also stimulate foreign direct investment from European automotive manufacturers.
While the agreement has been lauded by some as a major diplomatic achievement, some analysts suggest that its impact on global trade and economic growth may be limited. The Atlantic Council noted that several sensitive issues were deferred, and most benefits will likely emerge gradually through phased tariff reductions and regulatory certainty. They also suggest that the deal need not undermine US trade ties with India or the EU and could even spur the finalization of a US-India trade agreement.
